AbbVie Questioned on U.S. Taxes in Senate Finance Investigation
(Bloomberg) -- AbbVie Inc., already under attack by some congressional Democrats for its drug-pricing practices, is facing new questions from the Senate Finance Committee chairman over how it consistently loses money in the U.S. and doesn’t pay more in taxes.
Senator Ron Wyden, the Democratic chairman, noted in a letter Wednesday to AbbVie Chief Executive Officer Richard Gonzalez that the company reported a U.S. pretax loss of $4.5 billion in 2020 and foreign pretax profits of $7.9 billion. The North Chicago, Illinois-based drugmaker generated 75% of its global sales last year, a total of $34.9 billion, in the U.S.
“It appears that AbbVie shifts profits offshore while reporting a domestic loss in the United States to avoid paying U.S. corporate income taxes, and that the current U.S. international system seems to encourage that,” Wyden wrote. The senator said he’s investigating the impact of the 2017 law, and whether companies avoid taxes by shifting profits overseas.
AbbVie “has been able to successfully exploit the incentives to offshore profit” that were created in a 2017 tax law championed by former President Donald Trump, according to the letter from Wyden. President Joe Biden has proposed vast new spending that will be paid for with significant tax increases on corporations and the wealthy.
Last month, a report from the House Committee on Oversight and Reform highlighted AbbVie’s use of market power and the patent system to drive up the U.S. price of the world’s top-selling drug, the rheumatoid arthritis medication Humira. That success came at the expense of U.S. patients, even as prices declined abroad, the committee report said.
Wyden’s letter asked Gonzalez about Humira royalties. He requested a detailed list of foreign entities that reported pretax earnings for sales of the drug in the U.S., received any royalties or similar payments and the amount of earnings attributable to each. The senator pressed for similar data on cancer drug Imbruvica, which was also part of the House inquiry.
Representatives for AbbVie didn’t immediately respond to a request for comment.
Humira debuted in 2003 from AbbVie predecessor Abbott Laboratories and is now the world’s best-selling drug with about $20 billion in 2020 revenue. The arthritis medicine and Imbruvica, which was approved in 2013, together accounted for more than $25 billion in net revenue last year, more than half of AbbVie’s total, according to a company filing. AbbVie partnered with Johnson & Johnson on Imbruvica, with AbbVie leading U.S. sales.
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